Nestled in the heart of Europe, but with a mind-set that sets it apart from its neighbors, Switzerland has avoided much of the turbulence that roiled Europe over the past century — from wars to economic strife. But now its ability to remain neutral about the fate of the rest of the continent is under threat. Rising unemployment in the euro zone and the wider E.U., in stark contrast to Switzerland’s own prosperity, has pushed immigration to unsustainable levels — about 80,000 new immigrants from the E.U. every year, according to Swiss authorities. Last week, the seven-member Federal Council, which serves as Switzerland’s collective head of state, announced that starting on May 1 it would introduce quotas on long-term residence permits to make immigration “more acceptable to society and compatible with its needs.”

Switzerland’s woes are rooted in its good fortunes. While the debt-ridden E.U. is still in the grips of a financial crisis, Switzerland — not a member of the 27-nation bloc — continues to enjoy economic growth and a high standard of living, repeatedly ranking in international surveys among the best places to live. A low 3.1% unemployment rate — compared with 11% in the E.U. and about 8% in the U.S. — along with high salaries and relatively generous social services, has attracted jobseekers from poorer countries, especially since a 1999 agreement with the E.U. gave citizens of member states unrestricted freedom to live and work in Switzerland. People from non-E.U. countries have always been, and continue to be, subjected to the quota system. (Under Switzerland’s decentralized system of government, cantons — equivalent to U.S. states — administer quotas and issue work permits.)

In recent years, however, the number of documented foreigners has grown to nearly a quarter of Switzerland’s 8 million population — one of the highest ratios in Europe and a higher one than in the U.S., where legal migrants constitute about 13% of its overall population. This spike has sparked widespread concerns about the impact of immigration on the welfare system, housing and general infrastructure, prompting calls from politicians and other organizations for more restrictive immigration policies.

A right-wing Swiss parliamentarian, Natalie Rickli, even said during an interview last year on the Zurich TV station TeleZuri that “there are now too many Germans in the country,” referring to over 270,000 German immigrants who work in Switzerland’s service sector, while in Geneva there have been incidents of hostility toward an estimated 63,000 French citizens who each day cross the border to work in the city. Last year, a pamphlet by anonymous authors was circulated outside the Geneva University Hospital, criticizing the French workers for “their arrogance, their pollution, their contempt and their insolence.” And a Swiss environmental group, Ecopop, has warned of the strain immigrants are putting on tiny Switzerland’s natural resources. “There is unease among the population, and it’s necessary to take this seriously,” Swiss Justice Minister Simonetta Sommaruga said at a recent news conference.

As a member of the Federal Council, Sommaruga must support the government’s stance, but her own liberal party, the Social Democrats, has been critical of the quota system, claiming, along with other left-leaning groups like the Greens and the trade unions, that immigrants have had a positive impact on the Swiss economy. However, populist groups like the right-wing Swiss People’s Party (SVP) argue that migrants go to Switzerland mainly to claim welfare benefits and subsidized housing, even though there are no statistics to support this claim.

The government acted on April 24 by invoking a “safeguard clause” it included in its 1999 agreement with the E.U., which allows the Swiss to set immigration quotas to ensure that the country lets in only the workers it needs. It plans to issue a maximum of 2,180 long-term permits for migrants from eastern E.U. countries like Poland, the Czech Republic, Slovakia and Hungary and the Baltic nations, and 53,700 for immigrants from West European states.

Immediately after the announcement, the E.U. issued a statement criticizing the new immigration-curbing restrictions. The limits on foreign workers, the bloc’s foreign policy chief Catherine Ashton said in the statement, “disregard the benefits that the free movement of persons brings to the citizens of both Switzerland and the E.U.”

In Switzerland, the reaction to the new measures has been mixed. While centrist parties are satisfied with the quota system, the SVP says the restrictions are not stringent enough. Economists, meanwhile, warn that limiting immigration might have a negative effect on the labor market, especially in industries that rely heavily on foreigners, like construction.

“While this move might assuage growing fears among the conservatives, it could also lead to labor shortages in a country that has a very low unemployment rate and needs foreign workers to continue to grow,” says Michael Flynn, an expert at Geneva’s Graduate Institute Programme for the Study of Global Migration. He adds that the quotas also reinforce the idea that Switzerland enjoys all the benefits of trading with the E.U. “while doing everything to avoid sharing the pain that much of the continent is currently suffering.”

The pain, however, might be temporary. Restrictions will be in effect for one year, since the agreement gives Swiss authorities the right to unilaterally impose quotas only until May 31, 2014. The government has not announced its plans beyond this date, but since immigration is a hot-button topic in Switzerland — with right-wing groups calling for a major overhaul of the immigration policy — the Swiss could hold a national referendum in the first few months of 2014 to extend the clause. (Under Switzerland’s system of direct democracy, the citizens have the right to challenge — through a referendum — a legislative decision or create new laws.)

In the meantime, the country that has long counted on foreign workers will start counting them instead.